How to Improve Your Credit Score – 8 Tips

Jan 18, 2018 | John S Kiernan, Senior Writer & Editor

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There are many ways to improve your credit score. They range from paying down debts and reducing your credit utilization to simply making on-time bill payments each month. But you can remove guesswork from the equation by signing up for a free WalletHub account. We’ll tell you exactly how to improve your credit score and even how long it will take, as part of your Credit Analysis.

Credit improvement isn’t complicated, fortunately enough. Credit scores rise and fall based on the information in your major credit reports. The more positive info and the fewer negative records they contain, the better your credit score will be. That’s why it’s so important to understand what goes into your credit score. And it’s why you don’t need to get fancy to improve your credit score.

Rather, there are a number of simple steps you can take for the sake of credit improvement, and we’ll explain them below. We’ll also dispel some common credit-improvement myths, give you a sense of the timetable you’re looking at and more.

8 Easy Ways to Improve Your Credit Score

Check Your Credit Report for Errors

One in four consumers have an error in their credit reports, and four out of five who dispute them see changes to their reports afterward, according to the Federal Trade Commission. If you identify a mistake in your credit reports, you’ll need to follow the process for disputing credit-report errors, which is one of the easiest ways to improve your credit score and doesn’t take much time.

Keep Open Accounts in Good Standing

Lenders relay account information to the major credit bureaus every month. And the more accounts, or trade lines, you have in good standing, the more positive information will find its way into your credit reports. This will either water down negative records or help expand limited credit history.

While credit cards and loans both report to the major credit bureaus on a monthly basis, the former are far more accessible to the average consumer. Loans, of course, require repayment of whatever amount you borrow, but a credit card with no annual fee doesn’t have to cost you a thing.

Get a Secured Credit Card

If you have bad credit and are unable to get a “regular” credit card, open a secured credit card. Secured credit cards are easier to get than most other credit cards because they require a refundable security deposit, the amount of which usually acts as your spending limit. And they are treated just like any other credit card on your credit report.

You can also increase your spending limit simply by adding to your deposit, which may improve your credit score a bit. When you close your account, you will get your deposit back, minus any outstanding balances and finance charges.

Don't Apply for Credit Too Often

Applying for a credit card can lead to a slight dip in your credit score, especially when you apply repeatedly within a short period of time. Each application signifies that you will have less money to pay for every additional credit card or loan you get. And that’s a bad thing from a lender’s perspective. More importantly, applying in bulk tells lenders that you are desperate to borrow, which doesn’t bode well for your ability to pay.

So if you don’t get approved for an unsecured credit card after one or two rejected applications, opt for a secured card instead. Secured credit cards are great for credit improvement because they pretty much offer guaranteed approval.

Keep Your Credit Utilization Low

Try to maintain a credit utilization ratio below 30% on each of your credit cards. And if you really want to maximize your credit score, aim for less than 10%. A higher ratio hurts your credit score, as it indicates that you are stretched thin financially.

Credit utilization is determined by comparing the balance listed on your monthly statement against your available credit. You can improve it by spending less each month, asking for a higher spending limit or paying your bill multiple times per month to keep your statement balance as low as possible.

Don’t Close Unused Accounts

Lenders, landlords, employers and other decision makers known to perform credit checks are more likely to trust applicants with a long track record of responsible money management. Positive information in your credit reports about recently opened loans and lines of credit will help. But you have to prove yourself capable of making on-time payments and otherwise upholding your end of the borrowing bargain over time.

So put yourself in a marathon mindset. And focus on consistency, not quick fixes.

Build a Long Credit History

A lot of available credit and a long credit history are essential for a great credit score. That’s why it’s unwise to close old accounts, even if you no longer use them. Closing accounts will reduce your available credit, raise your credit utilization ratio and give the impression that you have little credit experience.

You should not, however, pay an annual fee to keep an unused account open. Rather, you should close accounts that are costing you money and use the savings to pay down debt or build an emergency fund.

Automate Your Payments

Some people struggle with remembering to pay their credit card bills on time. If you are one of them, call your credit card company and ask them to automatically withdraw your monthly payments from your bank account.

Others get tempted by credit cards to overspend and incur unnecessary debt. If you are one of them, the right solution isn’t necessarily to close all of your credit cards but instead to keep some of them open yet locked in a drawer (or even cut into pieces) to avoid using them. Before you do, though, make sure your credit card company won’t close your account if you don’t use it for a long time, which would be stated in your credit card agreement.

Nathan Mauck

Assistant Professor of Finance in the Henry W. Bloch School of Management at the University of Missouri - Kansas City

What is your best piece of advice for someone who wants to improve his or her credit?

Increasing a credit score can take time and it is best to plan ahead, especially if the motive for improving credit is part of planning for a big purchase. The first step is to make payments on time and take care of any past due accounts. Another option is to keep lower balances on existing credit.

What are the biggest mistakes that people make when trying to improve their credit?

Not checking your own credit report. One of the biggest misperceptions is that checking your own credit report will hurt your score. While it is true that if a lender pulls your credit report, that will be added to your history, this is not true when you pull your own report.

What is the biggest thing people don’t realize about the credit-improvement process?

Many people are unaware of how credit scores are calculated, so a little research can go a long way to helping.

Should you only worry about credit improvement if you have bad credit?

Definitely not. Improving credit should be of interest to anybody who uses or plans to use credit.

Elinda F. Kiss

Clinical Associate Professor in the Department of Finance in the Robert H. Smith School of Business at the University of Maryland

What is your best piece of advice for someone who wants to improve his or her credit?

The best way to raise your credit score (and keep it high) is to pay your credit card and other bills on time. Along with your payment history, details such as money owed, the length and mix of your credit history, and new credit are all factored into your credit score, according to FICO, the largest provider of credit scores.

Avoid having charge-offs, debt settlements, bankruptcies, foreclosures, suits, wage attachments, liens, or judgments in the past, as they negatively affect your credit score from seven to ten years.

Take advantage of the online banking that many banks offer. Setting up payment dates ahead of time will help ensure the good habit of paying on time.

What are the biggest mistakes that people make when trying to improve their credit?

Don’t just check your credit score, but also monitor your credit report for accuracy. Everyone is entitled to three free credit reports each year (one each from Experian, Equifax and TransUnion) at www.AnnualCreditReport.com.

Don’t “max out your accounts.” Be certain that the amount of credit that you are using is a small percentage of your credit limit.

Always pay at least the minimum amount, but try to pay much more than the minimum, or you may never pay off your loan.

Don’t close accounts. The longer the credit history, the better the score.

If you wish to learn your credit score, make certain that the site you search will give you a free score, and not sign you up for regular credit monitoring at a fee. Be wary of any free credit score that asks you to enter a credit card number. You're most likely being enrolled in a trial subscription to a credit monitoring service. If you don't cancel before the trial ends, the company will start charging your credit card for the service.

What is the biggest thing people don’t realize about the credit-improvement process?

The process takes time. The most important relationship between credit cards and your credit score is how good you are at paying them off. Getting a card that forces you to spend a certain amount to hit a rewards bonus may make it harder for you to keep up with payments, and lower your score.

Should you only worry about credit improvement if you have bad credit?

Furthermore, if you have a lower credit score, it may take longer for your loan application to be approved, you will pay higher rates, and you will pay large cash deposits when you open utility accounts.

How can you get credit and a credit score if you never had credit in the past?

Many financial advisors list “co-signed credit cards” as a great way to kickstart your credit, but many people do not have that option.

Many financial institutions offer a secured form of credit building by issuing you a “secured credit card,” but you need to put down a deposit until they feel you are no longer a financial risk. Rule of thumb with this new endeavor -- keep usage down, between 35-50% of your total limit, and always pay on time. Experts say building credit from scratch (without bankruptcy, judgements and loan defaults) should take approximately six months to a year. The length of time depends on your making timely payments and keeping your balances down.

The credit score is a statistical measure of an individual’s creditworthiness. Its calculation determines the likelihood that an individual would be able to repay a loan. At least six months' worth of payment history is required to provide enough data to generate a score. A person’s scores may also determine if a deposit is required, dependent upon the line of credit. Typically, lenders review the borrower’s scores and use that when determining interest rates and credit limits, if applicable to the credit type.

Various credit scoring models are used to analyze individual’s credit reports and payment histories. Credit scoring models are quantitative models that use observed borrower characteristics, either to calculate a score representing the applicant’s probability of default or to sort borrowers into different default risk classes.

The FICO score is derived based on five categories: 35 percent payment history, 30 percent total amount owed, 15 percent length of credit history, 10 percent types of credit, and 10 percent of new credit. These percentages reflect the weight of importance of each category when determining an individual’s FICO score for general population. Although the FICO Score is the most commonly used scoring report in the U.S., there are other scores that can be used to determine an individual’s credit score. These include VantageScore, TransRisk Score, Experian National Equivalency Score, CreditXpert, CE credit score and Insurance Score.

James R. Barth

Lowder Eminent Scholar in Finance in the Raymond J. Harbert College of Business at Auburn University

What is your best piece of advice for someone who wants to improve his or her credit?

The best advice is for an individual to always to try to make their credit card payments in full and on time.

What are the biggest mistakes that people make when trying to improve their credit?

The biggest mistakes are borrowing too much on too many credit cards so as to make the required payments in a timely manner.

What is the biggest thing people don’t realize about the credit-improvement process?

The biggest thing people don’t realize is that there is no quick fix to the credit-improvement process -- it takes time.

Should you only worry about credit improvement if you have bad credit?

No, one should always try to improve one’s credit score, which ranges from 300 to 850.

Debra M. Salvucci

Dean of the Meehan School of Business and Associate Professor of Accounting at Stonehill College

What is your best piece of advice for someone who wants to improve his or her credit?

In order to improve your credit, you must establish a solid credit history and strengthen your creditworthiness to lenders. This is best accomplished by making payments on all loans and credit cards consistently and on time.

What are the biggest mistakes that people make when trying to improve their credit?

Borrowing more than they can afford to pay back. Borrowers should determine how much debt they can realistically take on without overextending themselves. It is important to create a monthly budget to determine how much debt you can comfortably afford to make payments on, considering your level of income and other essential expenses.

What is the biggest thing people don’t realize about the credit-improvement process?

That you should contact your lender(s) if you are having difficulty in making your monthly payments to work out alternate arrangements for payment, or a revised payment plan. Do not skip a payment without notice to the creditor.

Should you only worry about credit improvement if you have bad credit?

No, continuous credit improvement is important for future borrowing needs (homes, autos, college tuition, etc.) and managing the interest rate you will be charged.

Maretno Agus Harjoto

Associate Professor of Finance at Pepperdine University

What is your best piece of advice for someone who wants to improve his or her credit?

Check how many credit card accounts you currently have. Start closing the ones that you no longer use. A lower number of open credit card will automatically increase your credit score, because you have fewer "lines of credit.”

Start paying down your principal, and do not follow the "minimum balance" payment recommendation. Pay everything in full. A smaller principal reduces the loan outstanding you have with the credit card companies, which increase your credit score.

Check your credit score periodically. Once a year or every 2 years is sufficient, but beware those credit scores companies who automatically enroll you with monthly credit scores checks. Those are costly. Theoretically, you can get your credit score for free.

Use cash and budget your spending. Spend only the amount of cash you budgeted, and not. Perhaps it would be even better if the amount spent was less than your budget.

What are the biggest mistakes that people make when trying to improve their credit?

They keep opening a new credit card accounts, and transfer the loan balance from one card to the next. This lowers your credit scores significantly.

What is the biggest thing people don’t realize about the credit-improvement process?

That it takes time to get our credit scores improved, and also significant and often painful adjustments in our lifestyles (to not spend what we do not earn).

Should you only worry about credit improvement if you have bad credit?

Not only do we have to be concerned with credit improvement, our histories of transactions and multiple credit card accounts are also subject to credit card theft, frauds, and hacking. There are people who look at obituaries and steal information (date of birth, name, place etc.) from those who have passed away, in order to open credit card accounts in their name. Beware, once you swipe your card, your information is stored everywhere, and anybody could potentially hack and access it.

Manuel Lasaga

Clinical Professor in the Department of Finance at Florida International University College of Business

What is your best piece of advice for someone who wants to improve his or her credit?

The old-fashion way is to establish a habit of always paying on time, and avoid always using your credit card to its limit;

Avoid making late payments -- you may want to make a habit of paying all your bills early;

Regularly monitor the activity on your account for any unauthorized charges;

Get your free copy of your credit report every year, and review carefully for any inaccuracies.

Suzanne Lynch

Professor of Practice in Economic Crimes at Utica College

What is your best piece of advice for someone who wants to improve his or her credit?

Pay your bill in full every month, or at least more than the minimum required. Do not open multiple accounts in a short time frame. Multiple inquiries contribute, as one of many factors, to your credit score.

What are the biggest mistakes that people make when trying to improve their credit?

Closing card accounts if you have a 0 balance. Even though it might seem like a good idea, credit grantors also look at how much you have not used on all your accounts, referred to as "Total Revolving Available," as a percentage of what you actually owe to creditors. Your credit score includes that as one of many factors calculated, so the higher percentage available, the better it is.

What is the biggest thing people don’t realize about the credit-improvement process?

It doesn't happen overnight. It can take many months of paying bills on time and increasing monthly payments to reduce the balance on your accounts. Credit grantors want to see a pattern of responsible behavior.

Anne Valdes Roberts

Accounting and Finance Faculty in the Business and Accounting Division at Central Piedmont Community College, CPA, MBA

What is your best piece of advice for someone who wants to improve his or her credit?

Don't make it complicated. Now that you've made the commitment to improve your score, simply leave the credit cards at home, make all your debt payments on time each and every month, and begin paying down the balances as quickly as you can. When paying off debt, start with the smallest amounts first. As you pay off those amounts, apply those payments to the larger amounts due.

What are the biggest mistakes that people make when trying to improve their credit?

They take a withdrawal from their tax deferred retirement plan to pay off their credit cards. This has the potential to cause significant tax problems, which just makes the problem worse.

What is the biggest thing people don’t realize about the credit-improvement process?

It's not going to improve overnight. Be patient. It took some time for your score to drop and it will take some time to get it back up. It won't happen as fast as you would like.

Should you only worry about credit improvement if you have bad credit?

Absolutely not. Your credit score drives the interest rates that you are offered by the banks and credit cards. So, you want your credit score to be as high as you can get it. Make it a personal challenge. Your credit report will generally tell you why your credit score is not as high as it could be. Use those comments to make the changes necessary to mitigate the issues listed.

Amelia A. Drobile

Adjunct Faculty in Finance and Business at Chestnut Hill College

What is your best piece of advice for someone who wants to improve his or her credit?

Be aware of your current situation and investigate your scores at the three main credit reporting agencies. Know the facts of where you stand, first. You have to recognize what your starting point is, and then determine your weakest areas and what you feel you can successfully act on to improve in your credit score/history.

What are the biggest mistakes that people make when trying to improve their credit?

Fully understand your circumstances. Consider behavior and spending habits, be honest. Make certain you know the details, and the obligation you have, or will be willing to accept.

What is the biggest thing people don’t realize about the credit-improvement process?

It takes time and discipline. There is no fast and easy solution, but slow and methodical process. Do not look to the quick fix methods -- they are a short-term fix to a long-term problem. Investigate yourself as best you can. You are in control, and the information you need is available to you.

Should you only worry about credit improvement if you have bad credit?

Unfortunately, many do not check their available credit until there is a need, and at that time, it is difficult to address quickly. You will suffer higher interest rates that may not be necessary. It is wise to keep an eye on the situation before you need it. If you have poor credit, you need to be more vigilant in checking and taking steps to address the situation, and your consumer behavior, on a consistent basis.

Heather Clifford

Director of Financial Aid at Bennington College

What is your best piece of advice for someone who wants to improve his or her credit?

Slow down. Do your homework. Understand what is on your credit report and what each action will mean in terms of increasing or decreasing your credit score. The new app that the Department of Education is going to release next year for the FAFSA has an entire section dedicated to financial literacy.

The new FAFSA app will have a section for students to understand their student loan borrowing level, connect directly with their loan servicer, get a free monthly credit report, freeze their credit reports right from their cell phone, and get alerts. Putting this in the app shows the importance of learning this early in the borrowing process.

What are the biggest mistakes that people make when trying to improve their credit?

Many people think that canceling credit cards or dropping credit will help them reduce their credit footprint, but it actually hurts them.

What is the biggest thing people don’t realize about the credit-improvement process?

It is slow and steady, and the little things matter. Use bill pay and make sure your payments are on time. Don’t overextend yourself. Be realistic about what you are able to repay.

Should you only worry about credit improvement if you have bad credit?

Kyle J. Putnam

Assistant Professor of Business at Linfield College

What is your best piece of advice for someone who wants to improve his or her credit?

The best way to improve your credit is to simply manage it responsibly and consistently over time. There is no quick fix for credit improvement, and so it’s important to be patient with the process. In terms of tangible steps, the first thing you should do is request a free copy of your credit report and see if there are any errors reported, such as late payments. If you do find an error, you should immediately dispute it with the credit bureau (this process can also take time, so be patient).

Second, ensure that all of your credit payments going forward are made on time. For many people, this often means setting up automatic payments through their financial institution. Third, and finally, pay down your debt. This not only gives you a sense of personal achievement, but it improves your credit score since usage, i.e., percent of total credit used, is a key component of your overall credit score. Lenders look for individuals who are responsible with their usage, and the better you can live within your means, the less credit you will need to rely on; for those trying to improve their scores, shoot for usage of 30 percent or less.

What are the biggest mistakes that people make when trying to improve their credit?

Those who have collection accounts on their credit reports often rush to pay off those debts with hopes that they will be removed and dramatically improve their credit scores, but those accounts will stay on your credit report for seven years regardless of whether you pay them off or not. Moreover, individuals who have trouble managing their debt often turn to debt counselors as resources for unbiased advice, but be very wary of these companies, as not all of them operate with your best interests in mind. Unethical debt counselors will recommend debt management plans that ultimately heap more debt onto individuals.

What is the biggest thing people don’t realize about the credit-improvement process?

It takes time. There is no quick fix or instant repair. Any services out there that advertise such opportunities are trying to scam you. Your credit score is a gauge of your ability to manage debt over time, and if you have mismanaged it for a number of years, then you need to show that you have “righted the ship” for a period of time before the results are evident.

Should you only worry about credit improvement if you have bad credit?

Yes, and no. If you have a high credit score, then you are exhibiting the characteristics of someone who can effectively manage their debt and personal finances, and probably don’t need to make any big changes. In that regard, keep doing what you’re doing. However, everyone, regardless of credit score, should take a look at their free annual credit report to see if any errors show up, so that they can be disputed in a timely manner.

Melvin Randolph

Adjunct Professor in the Business Management Program at Calumet College of St. Joseph

What is your best piece of advice for someone who wants to improve his or her credit?

The best piece of advice I could give to someone who wants to improve their credit is to take the following steps:

Borrow money and use your credit cards. Most people are so afraid of getting into debt that they choose to pay for everything with cash. Don’t get me wrong, there is nothing wrong with paying for items with cash, but just remember, if you never borrow or use your credit card, there is no way to build your credit. So, the first tip is to use your credit.

Make sure you can manage a payment schedule to pay back what you borrow. I usually tell clients and students to take the total balance and divide that number by four, and make that payment every month by the due date. If consumers follow these tips, they will definitely see their credit improve.

What are the biggest mistakes that people make when trying to improve their credit?

One of the biggest mistakes consumers make when trying to improve their credit is applying for too many credit cards at one time. If a consumer has a high credit-to-debt ratio, he/she should try to lower their credit card balances before applying for new credit. Applying for a new line of credit while balances are high can lower your credit score in two different ways. First, having high balances work against you and second, every time you apply for new credit, a creditor checks your credit report, and this also lowers your credit score.

What is the biggest thing people don’t realize about the credit-improvement process?

The biggest thing people don’t realize about the credit-improvement process is that it takes time. It can take up to a year before a consumer will see any big changes to their credit score.

Should you only worry about credit improvement if you have bad credit?

Credit improvement is something both people with good and bad credit should worry about. People with bad credit should be interested because they are in the position where they are trying to improve their credit, so that they get better interest rates. People with good credit should be interested because improving their credit or maintaining a good credit standing can yield rewards from creditors for having excellent credit. For example, a creditor may increase a borrower’s credit limit. So, credit improvement is beneficial for everyone.

Rakesh Gupta

Former Dean of the Robert B. Willumstad School of Business at Adelphi University

What is your best piece of advice for someone who wants to improve his or her credit?

Credit scores take time to increase because they are built on several years of financial history. But, the person must stop doing the following:

Late payments;

Skipped payments;

Too many applications for additional credit;

Transferring balances to new credit cards.

What are the biggest mistakes that people make when trying to improve their credit?

Transferring balances from one credit card to another.

Making only minimum monthly payments on credit card bills.

One thing that can be done is to correct factual errors in one's credit reports. These can be corrected by writing to the credit bureaus. If the errors are in each credit bureau's report, then each bureau needs to be contacted in writing. The errors are likely to be corrected if one can provide documentary proof of the error. Once notified, the credit bureaus must respond within 30 days. If you are not satisfied by the decision of the credit bureau, you are entitled to have your statement included in your credit report.

Alvenetta Wilson

Business Office Technology Professor at San Jacinto College

What is your best piece of advice for someone who wants to improve his or her credit?

Pay down debt to 20-30 percent of balance;

Refrain from spending;

Refrain from hard credit inquiries.

What are the biggest mistakes that people make when trying to improve their credit?

Closing credit cards and paying off credit cards at once.

Jason Beck

Associate Professor of Economics at Georgia Southern University

What is your best piece of advice for someone who wants to improve his or her credit?

The only way you can really boost your credit score by a lot very quickly is to discover an error, which does sometimes happen, so it’s not a bad idea to review your credit report every few years.

A good credit score is something that takes years to build up but can be knocked down in an instant. The best way to build your credit is simply to pay your bills on time, month after month. One missed payment, even if it had nothing to do with your ability to pay (maybe you just forgot) can knock your credit score down 50, or ever 100 points. After such a hit, it could take you years to get back to where you were.

To establish credit, you do have to use it, but don't get carried away. Carrying large, revolving balances on credit cards probably won't help your credit. Keep usage reasonable relative to your credit limit and make sure you pay on time and more than the minimum and you should see your credit score grow over time.

Shalandria Williams

Financial Coach at Houston Community College

What is your best piece of advice for someone who wants to improve his or her credit?

If pop culture phenomenon, DJ Khaled, was to announce this, he would say, “Major Key Alert -- If you want to improve your credit score, focus on timely payments and utilization of current accounts.”
Most individuals would assume that establishing new lines of credit would help increase their credit score, however, this doesn’t impact your score that much and only results in you creating additional debt.

The easiest way to avoid losing points on your credit score is to avoid overusing your available credit. Your best bet is to maintain current lines of credit by working hard to keep balances/utilization low. 30 percent or lower is the standard recommendation for credit utilization. Your credit utilization is generally calculated based on your total outstanding balances compared to your total credit limit across all of your cards. Your goal should be to keep your balance below 30 percent on all of your cards at all times.

This approach shows creditors that you have healthy spending habits, value having a positive payment history and are not solely dependent on the use of their credit line. It really sets you up to build a positive rapport with your creditors.

Every relationship thrives from consistency. Establishing a consistent, positive payment history demonstrates to creditors that you are committed to paying what is agreed, when agreed. Once you commit to consistency, you will see your credit score increase.
Be disciplined. Stay the course. Reap the benefits.

Armando Galvan-Cruces

Financial Coach at Houston Community College

What are the biggest mistakes that people make when trying to improve their credit?

Having less credit lines -- to close or not to close is the oldest debate in credit repair. Simply put, having a zero balance on a credit card will not affect your score -- so why close the card and risk it negatively affecting your score?

Using credit cards more to improve your score -- ask yourself, if you’re already in debt, why would your answer to fix it be getting into more debt? Increasing your utilization of your credit cards doesn’t increase your credit score. Creditors see a high utilization rate as a sign that you don’t have enough cash flow to pay down your debts. Your credit utilization is generally calculated based on your total outstanding balances compared to your total credit limit across all of your cards. Having under a 30 percent utilization rate is adequate for individuals who want to improve or maintain their credit score.

Not paying anything -- when you have had bad credit for so long, it is easy to think that you don’t have any options. When you feel there are no options, you feel the situation is hopeless and not worth trying to fix. You may be in debt, but you do have options. Even when you don’t know where to start, your best option to work toward a debt-free goal is to pay the minimum. Not paying the minimum on your credit cards has a negative effect on your credit score, and conveys to creditors that you’re unreliable. Make sure that if you don’t have enough money to pay your minimum, call your collector/bank to make proper repayment arrangements.

Dominique Brown

Financial Coach at Houston Community College

What are the biggest mistakes that people make when trying to improve their credit?

The biggest mistake people make while trying to improve their credit score is doubting themselves. They think, “It’s too hard do this and I don’t know where to start.” But then, miraculously, a credit repair agency ad makes it all seem so simple -- for a fee, of course. Credit repair agencies offer to repair your credit or provide a new credit identity, however, for a one-time or recurring fee. That urge for an “easy solution” leads to a click of an ad that costs you money to resolve debt. Why pay a fee to get rid of debt? If you have money for a fee, you should put it toward paying down debt to repair your credit. Before seeking a credit repair agency, you should visit a free financial coach via a local social service provider or college. Yes, many colleges offer financial coaching for free.

Most people think the only solution to improve their credit is to take out multiple credit cards, buy something on them and then pay the very minimum to each card. While doing this will slightly improve their credit score, it may not have a significant impact, and consequently adds to their mounting debt. Before getting more cards, it’s best to focus on remaining current and on any delinquent accounts.

When most people focus on improving their credit, they focus on existing accounts only, and completely ignore their collection accounts. Although it is important to maintain a healthy relationship with existing creditors, you must not completely ignore accounts in collections. Remaining current on existing accounts and working to reconcile accounts in collections will ultimately have the biggest impact on improving your credit score.

It is a big accomplishment to pay something off. In an effort to not fall back into the same trap, many people close their credit cards after they finish paying. However, it may be best to keep some, if not all open, to help balance their utilization vs. available credit ratio. Rest assured that you can apply the same discipline it took to pay off the cards to resist the temptation of falling back into significant debt.

Christine Madden

Graduate Assistant for the EIU Literacy in Financial Education (LIFE) Center at Eastern Illinois University

What is your best piece of advice for someone who wants to improve his or her credit?

The first thing I would suggest is checking your credit report and making sure there are not any discrepancies. I know of someone who has a twin sibling with a similar name who had hits against him that were not his own. The system is not infallible, so monitoring your credit and making sure it is correct is the first step. Secondly, one could lower their debt ratio. By paying off more than the minimum payment on credit accounts, people can lower debt faster and even pay less in the end.

What are the biggest mistakes that people make when trying to improve their credit?

The most common mistake I hear about is rolling credit into one payment and then not changing the habits that got you in debt in the first place. For example, one way to consolidate credit card debt is to take out a line of credit on your home or refinance (rolling them in) to get rid of debt. This can be a great idea, but if you continue to spend on credit and work yourself into credit card debt again with the new line of credit lien against you, you will be in much worse shape than before. Improving credit will generally involve improving practices in spending and managing money.

Joanne Pencak

Lecturer in Accounting and Sustainable Entrepreneurship in the Grossman School of Business at the University of Vermont

What is your best piece of advice for someone who wants to improve his or her credit?

First, if you are attempting to increase your credit score in a short amount of time, I would be concerned that you might be trying to increase your debt when it might not be the best thing for you. If your credit score is low due to mishandling credit, getting more credit may not be what is best for you. One thing you must absolutely do is check your credit reports to ensure that they are accurate. Approximately 20 percent of credit reports have errors on them. If you find an error, you should contact both the reporting company and the credit issuer to resolve. The most important factor is paying your bills on time.

What are the biggest mistakes that people make when trying to improve their credit?

They sometimes keep applying for credit, hoping something will change. When you apply for credit, lenders pull your credit report, and that can have a negative impact on your credit rating. It may be better instead to try to increase your credit line with an existing lender, because they will often make their decision without conducting a hard credit check. When a lender increases your credit line by checking your credit score without pulling your full credit report, it is known as a “soft” credit check and it will not negatively affect your credit score. Once you have secured additional credit, you should not use that credit. The goal is to decrease the percentage of your total credit line outstanding.

Richard Gearhart

Assistant Professor of Economics at California State University - Bakersfield

What is your best piece of advice for someone who wants to improve his or her credit?

It is nearly impossible for an individual to dramatically improve their credit score over a short period of time. A credit score is a long-term measure of financial responsibility on the part of a consumer. At best, by being able to pay off large amounts of delinquent bills, a consumer may be able to realize some improvement in their credit score. Beware of companies and individuals that do promise their ability to do this.

There are some short-term strategies that can be undertaken, however, that can improve financial decision-making that will have a longer-term impact on credit scores. These include saving $25 more per paycheck, cutting out a soda or Starbucks or beer per day, packing lower cost lunches, and meal prepping on Sunday's. This can free up discretionary income to pay off delinquent bills and can help create a system where you learn to save.

What are the biggest mistakes that people make when trying to improve their credit?

Being a co-signer for a friend or family can negatively impact your credit score if they fail to meet their financial obligations. Similarly, there is little truth to the myth that companies out there can swiftly negotiate reductions in your outstanding payments without negatively impacting your credit scores. Many of these "institutions" are predatory and come, in many circumstances, with a variety of issues of their own (higher long-term payments, lowered credit scores, etc.).

Perhaps the biggest issue for individuals who are trying to improve their credit scores is when they do not realize that it takes significant behavioral change on their part to improve their scores for good. Long-term savings is a necessary condition to establish a high credit score, as it allows individuals to meet their financial obligations during periods of economic labor market turmoil (fired, reduced number of hours, lowered income, etc.). Similarly, smart purchasing habits (buying in bulk, buying only what you need, reducing frivolous spending, such as a "super-size" fry or a Starbucks latte) are essential in achieving these goals.

Shunlan Fang

Assistant Professor of Accounting in the College of Business Administration at Kent State University

What is your best piece of advice for someone who wants to improve his or her credit?

Credit score measures one’s financial default risk, which is determined by a person’s debt level, income, consumption behavior and history of credibility. In the short run, reducing the debt level and changing consumption behavior are the most viable ways to improve credit score. For example, if you carry a large credit card balance, it will be helpful to paying off as much as you can. Reducing spending on entertainment or unnecessary consumption through credit cards will also likely improve your credit score, since those activities are closely monitored by credit card companies and could be used to determine your ability to repay balances.

What are the biggest mistakes that people make when trying to improve their credit?

Robin L. Shuler

Instructor of Accounting in the School of Business, Government and Economics at Seattle Pacific University

What is your best piece of advice for someone who wants to improve his or her credit?

Get out of debt as quickly as possible, hopefully by always consistently paying more than the minimum balance due and, most importantly, more than the previous month’s combined purchases, charges and interest.

Pay off your most expensive debts first, without allowing other debts to increase. Prepare a schedule and plan your debt reduction strategy.

Avoid being late with payments. It may be worth paying via the lender’s website, as sometimes you can get credit for paying earlier than if you would send payment from your own bank or mail a check.

Use credit unions rather than banks, as they usually have more borrower-friendly policies and fees.

Beware of balance transfer offers. They often try to rope you in, then hit you with much more onerous fees when the offer period ends. Be aware of what the ultimate interest rate would be, if you carry any debt beyond the offer period. Also, there may be other adverse consequences if you are late on even one payment.

Try to maximize your unused credit. Do this by paying off credit cards one by one, then putting them away in a drawer or safe. Don’t cancel them, as this will reduce the amount of unused credit you have. The credit score is based in part on the amount of debt you carry as a percent of your total credit available.

When all of your credit is paid off, keep it that way by paying off any current usage before the due date.

Celebrate each debt you pay off (and not by spending a bunch of money). Each zero-debt balance you achieve and keep is like a badge of honor. Take pride in your achievement.

Sarah K. Bryant

Professor of Finance at Shippensburg University

What is your best piece of advice for someone who wants to improve his or her credit?

First, realize that your credit score is like your reputation, hard to build and easy to destroy. Months or years of payments can be undone in one shopping day. Credit can be hurt by one missed payment.
Open two to three accounts, like a car loan or credit cards. Use them sparingly, and keep them paid off monthly. If you carry a balance, make sure not to overdo it.

What are the biggest mistakes that people make when trying to improve their credit?

Some people think that they should open several accounts and just not use them. This does not work, as credit agencies look at how much credit you have available to determine at least a part of your score. The idea is that if you have credit, even if you are not using it, there is still a risk that you will.

Also, people pay down cards and forget to close the account. This then goes back to the point above with too much credit available, even if not used.

People get impatient so that they pay for a while, then go on a shopping spree or buy a car.

Parents do a poor job teaching their children about credit or bank accounts. When children get away from home, they think that they have money in their checking accounts when bills may be due. The same happens with credit cards. Some even think that they do not have to pay credit cards back, that it is free money. Others use "retail therapy" when they feel depressed. More debt makes them more depressed, so they spend more. Amazing, but true -- a downward spiral.

George S. Vozikis

Professor in Residence in the School of Business & Communication at Chaminade University of Honolulu, and Edward Reighard Chair in Management (retired) at California State University-Fresno

What is your best piece of advice for someone who wants to improve his or her credit?

Make payments on time and obtain a credit card, charge a small amount and pay it in full and on time when it is due. Then do the same once or twice a year.

What are the biggest mistakes that people make when trying to improve their credit?

Lenders look for signs of responsible credit usage, and the better you are at living within your means, the better it is for your score. If you are using most of your credit, it may be difficult for you to get additional credit or credit with a good interest rate. Therefore, using less than 30 percent of your available credit is a good goal, but keep in mind that using some available credit and paying it off monthly may be better than not using any credit at all.

Marta Shen

Senior Vice President of Wealth Management at the Spring Street Financial and Adjunct Professor at Oglethorpe University

What is your best piece of advice for someone who wants to improve his or her credit?

Get a copy of your credit report through AnnualCreditReport.com. This is the one that the three credit agencies (Equifax, Experian and TransUnion) support. Check to see if it is accurate. If not, you can dispute it.

It goes without saying that if you want to have good credit, you need to pay your bills on time. This cannot be over emphasized. Having a late payment reported can significantly lower your credit score. Beyond that, you also need to show that you can handle credit. Depending on what is affecting your credit score negatively, you would want to address each one. Credit scores can range from 300-850. Above 800 is exceptional. Above 740 is considered very good, and will still give you the lowest rates/best terms when you apply for loan for a car, home, etc.

Keep accounts which you’ve had for a while open as age of accounts is a factor in your credit score. Pay down cards. If you maintain a balance, the goal is to keep under 50% of revolving/credit card limit, as utilization ratio is a factor. Have a mix of credit use -- e.g., revolving (credit card), installment (car loan).

How your credit score is determined:

35% of your score is made up of your payment history;

30% of your score is your credit utilization;

15% of your score is your credit history;

10% of your score is made up of the types of credit you use;

10% of your score is your request for new credit.

What are the biggest mistakes that people make when trying to improve their credit?

To not have any credit. Many people believe that not owing anything improves their credit, when in reality, your credit score is based on your ability to handle credit, not avoid it.

Valrie Chambers

Associate Professor of Taxation and Accounting in the M.E. Rinker Sr. Institute for Tax and Accountancy at Stetson University

What is your best piece of advice for someone who wants to improve his or her credit?

First, make sure that your credit score is accurate. Errors about late payments and defaults will negatively affect your credit score, and must be corrected by the credit agency to the extent that you can prove it is in error. Aside from that, paying down debt can help your credit score because it generally increases the unused line of available credit that a customer has.

What are the biggest mistakes that people make when trying to improve their credit?

In trying to improve their credit score, some people pay down the wrong debt first. This doesn’t necessarily hurt their credit score, but may hurt in other areas of their life, especially if they are struggling financially. For example, if someone can’t make a payment on all of their debt, but pays a credit card before a student loan from the government, that’s likely unwise. The government has far more recourse for the unpaid debt and will withhold tax refunds, which may be needed for food and rent, to pay off the otherwise unpaid amounts. That is, credit scores are part of overall financial health, and must be viewed as such.

Daniel P. Sorensen

Associate Professor in the College of Business Administration at Oklahoma Christian University

What is your best piece of advice for someone who wants to improve his or her credit?

In order to answer this question, it may be helpful to review the elements that make up a person’s FICO (or credit) score. Three of the most important components of a credit score are payment history, amounts owed, and length of credit history. A couple of other components are types of credit used, and new credit.

There are several things that can be done that could impact the score quickly. First, you should review your credit report periodically to make sure that there are no erroneous items on your report that are harming your score. If there is something on the report that doesn’t legitimately belong there, you can challenge it and potentially have it removed. Second, you should pay down a significant portion of debt balances, assuming that you have the financial resources to do so.

Some of the items that affect your credit score, such as length of credit history and payment history, can only be fixed over time. For example, you should develop the habit of paying your bills on time. If you are behind on any payments, get caught up as quickly as possible.

What are the biggest mistakes that people make when trying to improve their credit?

Many people never check their credit reports. In a time where identity theft is a growing problem, reviewing your credit report is extremely important. Cyber criminals may be ruining your credit by borrowing money in your name.

Many people don’t realize that opening up a new charge account can harm your credit score in the short run. New credit sources are a drag on your score for a period of time.

A. Mechele Dickerson

University Distinguished Teaching Professor and Arthur L. Moller Chair in Bankruptcy Law and Practice at The University of Texas at Austin School of Law

What is your best piece of advice for someone who wants to improve his or her credit?

Start early and stay vigilant -- this is the best advice I’d give. Although it’s not something most young people consider, good credit is one of the most valuable things they can have in life. Unless teenagers are fortunate enough to live in a state that has a mandatory high school class on financial literacy, most of them may not realize that their credit score can affect the type of job they get, the type of housing they can rent or buy, and how much they will pay for things if they make the purchase on credit. As soon as you start buying things on credit, you need to be sure to use credit responsibly, and you should periodically check your credit to be sure that no one has swiped your identify.

Should you only worry about credit improvement if you have bad credit?

No. Unless your credit is perfect, you should always try to improve your credit. The main reason people should be concerned is that what is “good” or “bad” credit can be a moving target. The magic “good” credit score varies (and you have no way to control the number), depending on whether the credit score is being used to approve a credit card, an automobile or mortgage loan, or whether a potential employer is checking your credit to decide whether to offer you a job. This is one area where it’s good to strive for perfection, even if it’s unlikely you’ll ever get there.

Roger Bertling

Lecturer on Law at Harvard Law School

What is your best piece of advice for someone who wants to improve his or her credit?

The simplest advice is to check your credit reports fairly often (at least once a year). The best advice is to make sure you pay your bills, particularly credit cards, student loans, car loans and mortgage on time.

What is the biggest thing people don’t realize about the credit-improvement process?

That it’s a slow and incremental process. Each month, each timely payment is like a brick in a wall. With a lot of time and steady work, you will see improvement in your credit score.

Should you only worry about credit improvement if you have bad credit?

Unfortunately, credit affects everyone, and even small changes in your credit score can alter the interest rates that you pay for credit cards and mortgages. So, I would say that even those who do not have “bad credit” should be sure they are making timely payments on their debts.

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I have very bad credit score, 546 to be exact and this is because of unpaid hospital bills. I did buy a car, don't know if that will help to improve my credit score - paying monthly for the car, but will also be paying off my hospital bills. Will it help my credit score go up especially if I use a secured card?

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March 23, 2016

I have very bad credit score, 546 to be exact and this is because of unpaid hospital bills. I did buy a car, don't know if that will help to improve my credit score - paying monthly for the car, but will also be paying off my hospital bills. Will it help my credit score go up especially if I use a secured card?

If I pay off the reports that I have in collections, is there any way I can get the info removed so it does not show up on my report any sooner than 7 years?

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@WalletHub

February 23, 2016

Unfortunately not. As long as it’s accurate, negative information on your credit report cannot be removed before the prescribed timeline associated with it runs its course. You can learn more here: https://wallethub.com/edu/negative-information-on-credit-report/25499/ . Hope this helps.

My credit score is very bad , and I wanted to buy a house. I paid some of the big payments but my score doesn't go up ... How much time will it take? Or is there any other way to buy a house with bad credit score?

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August 23, 2015

My credit score is very bad , and I wanted to buy a house. I paid some of the big payments but my score doesn't go up ... How much time will it take? Or is there any other way to buy a house with bad credit score?

I have a problem with my bank apparently they can't finance me on a car because I don't have a credit score so I decided to go take a contract phone which I will b paying every month for a period of two years, I would like to know how long I should wait before going back to the bank for my car finance

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July 14, 2015

I have a problem with my bank apparently they can't finance me on a car because I don't have a credit score so I decided to go take a contract phone which I will b paying every month for a period of two years, I would like to know how long I should wait before going back to the bank for my car finance